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Reasons to invest in Zambia

Zambia is a multi-party democracy and provides a market oriented liberalized economic environment. The Zambian Government welcomes all investors and has designed a package of incentives aimed specifically at creating a sound investment climate for increased domestic economic growth.

The country’s central location in the region as well as combination of following key strengths makes Zambia an ideal investment destination.

  • Abundance of natural resources and labour, which are highly under-utilized
  • Continuous political stability since attaining independence in 1964
  • Abolition of Controls -Price, Interest Rate, Foreign Exchange and free repatriation of earnings and repayments
  • Guarantees and Security to investors with statutory rights to full and fair compensation
  • Duty Free Access to Regional, wider African and the USA markets under SADC, COMESA/FTA, AGOA (African Growth and Opportunity Act), and Cotonou Agreements respectively
  • Banking, Financial, Legal and Insurance services of international standard as well as a Stock Exchange
  • Double Taxation Agreements with number of European, North American, African and Asian countries
  • Attractive place to work and live – sub-tropical climate and vegetation with plenty of water and electricity.
  • Friendly people, mostly English speaking with high literacy rate.
  • Educational establishments to University level.
  • Strong religious values.
  • Open-air lifestyle with nature reserves, game parks, rivers, lakes and waterfalls.
  • Thriving Private Sector – Government has successfully privatized most of the previously state owned enterprises thus encouraging an entrepreneurial spirit.

Investment Incentives

The Investment Act of 1993 (amended 1st April 1996) offers a wide range of incentives in the form of tax allowances, exemptions & concessions for companies, which include:

  • Buildings for Manufacturing, Mining and Hotels enjoy initial allowance of 10% and an annual 5% wear & tear Allowance of the cost.
  • Machinery for Farming, Tourism and Manufacturing qualify for wear & tear allowance of 50% per annum for the first two years.
  • Dividends from farming exempt from tax for first 5 years
  • Capital Expenditure on farm Improvements -20% per year write off for the first 5 years
  • Farm Works Allowance – 100% write off on stumping, clearing, prevention of soil erosion, boreholes, wells, water conservation and aerial or geographical surveys.
  • Customs Duty Exemption on machinery and equipment for mining and agriculture
  • Duty Free Imports of organic and inorganic chemicals, rubber, steel and plastics; most other inputs at 5%.
  • Customs Duty on Intermediate Goods 15% and on Finished Goods 25%.
  • Specific sector-related fiscal incentives and duty/tax concessions packaged for the Mining, Manufacturing, Agriculture, Tourism and Energy sectors.

Some incentives relating to investments on the Lusaka Stock Exchange (LuSE):

  • Corporate Tax reduced to 33% compared to normal 35%
  • Foreign Ownership – No restrictions on ownership levels
  • Shareholder Levels – No restrictions on shareholder levels
  • No Capital Gains T

Source: Small and Medium Enterprise Toolkit for Zambia (SME Toolkit for Zambia)

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